Regulatory Alerts2019-03-05
Directive on the Computation of Loan-to-Value Ratio for Residential and Commercial Property Loans
The National Bank of Rwanda issued Directive N° 2600/2019 to standardize how banks compute and enforce maximum loan-to-value (LTV) ratios for residential and commercial property loans. The directive mandates that LTV calculations use the lower of purchase price or appraised market value, capping first primary residential loans at 100 percent and all other residential and commercial loans at 80 percent. Banks must establish internal LTV policies, utilize independent valuers, treat spouses as a single borrower, and face administrative fines of one percent for non-compliance within a six-month transitional period.
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